Where Will Your Next Gadget Be Made? 378
hackingbear writes "The New York Times is warning of the possibility of price inflation for gadgets, cars, and many other items, not from our skyrocketing government debt, but rather the increasing cost of doing business in China. Coastal factories are raising salaries, local governments are hiking minimum wage standards, and if China allows its currency, the renminbi, to appreciate against the US dollar later this year, the cost of manufacturing in China will almost certainly rise. (The report missed the biggest cost factors in China — electric and water utility costs.) 'For a long time, China has been the anchor of global disinflation,' said Dong Tao, an economist at Credit Suisse. 'But this may be the beginning of the end of an era.' The shift was dramatized Sunday, when Foxconn, the maker of the iPhone and everything else, said that within three months it would double the salaries (rather than the rumored 20% increase) of many of its assembly line workers."
"And last week, the Japanese auto maker Honda said it had agreed to give about 1,900 workers at one of its plants in southern China raises of between 24 and 32% in the hopes of ending a two-week-long strike, according to people briefed on the agreement. However, while big and famous manufacturers, like those in the US and Europe, may worry about their PR images and give in to labor demands, it is unclear if thousands of smaller ones will follow. And given the millions of people waiting for work in other countries, from India to Vietnam, the only thing that may have changed is the prevalence of Made in China labels of your gadgets."
who cares where it's made..... (Score:3, Informative)
I care where I get it. I've been getting more and more used instead of new. There are a lot of "trendy" types that sell things use at a insane rate. I got a iPhone 3Gs that was like new for $159.00 off ebay for her used.
I buy everything used now. you get more value for the dollar.
I end up with more stuff and more money. It's a Win-Win.
Re:Honestly, I hope the US (Score:5, Informative)
Re:Shoddy gadgets from another cheapish country? (Score:4, Informative)
When did Mexico become part of South America?
I want my next gadget... (Score:3, Informative)
Re:China Wins Big no matter what (Score:2, Informative)
Some number from that globalfirepower-site:
US vs China:
U) Total Population: 303,824,640 [2008]
C) Total Population: 1,330,044,544 [2008]
U) Purchasing Power: $13,780,000,000,000 [2007]
C) Purchasing Power: $7,099,000,000,000 [2007]
U) Foreign Exch. & Gold: $70,570,000,000 [2007]
C) Foreign Exch. & Gold: $1,534,000,000,000 [2007]
U) Defense Budget: $515,400,000,000 [2009]
C) Defense Budget: $59,000,000,000 [2008]
CIA world fact book:
USA vs China:
GDP (purchasing power parity):
U) $14.26 trillion (2009 est.)
C) $8.789 trillion (2009 est.)
GDP - real growth rate:
U) -2.4% (2009 est.), 0.4% (2008 est.), 2.1% (2007 est.)
C) 8.7% (2009 est.), 9% (2008 est.), 13% (2007 est.)
Unemployment rate:
U) 9.3% (2009 est.)
C) 4.3% (September 2009 est.)
Population below poverty line:
U) 12% (2004 est.)
C) 2.8% (2007)
Investment (gross fixed):
U) 12.5% of GDP (2009 est.)
C) 42.6% of GDP (2009 est.)
Budget:
U) revenues: $1.914 trillion
U) expenditures: $3.615 trillion (2009 est.)
C) revenues: $972.3 billion
C) expenditures: $1.137 trillion (2009 est.)
Public debt:
U) 52.9% of GDP (2009 est.)
C) 18.2% of GDP (2009 est.)
Industrial production growth rate:
U) -5.5% (2009 est.)
C) 8.1% (2009 est.)
Current account balance:
U) $-380.1 billion (2009 est.)
C) $296.2 billion (2009 est.)
Exports:
U) $994.7 billion (2009 est.)
C) $1.194 trillion (2009 est.)
Imports:
U) $1.445 trillion (2009 est.)
C) $921.5 billion (2009 est.)
Debt - external:
U) $13.45 trillion (30 June 2009)
C) $347.1 billion (31 December 2009 est.)
Quite disturbing numbers aren't they?
For instance debt + account and budget balance. But also investment and so on.
Re:The next chinese will be robots (Score:3, Informative)
>
It's been said, a pair of $75 nike's would cost $300 if made by americans.
But it hasn't been said correctly then. See: http://www.consumersinternational.org/files/99672/FileName/RealDealRunningShoes-FINALFINAL300609.pdf [consumersi...tional.org] .
The article does a breakdown on the cost of a 100 Euro running shoe. Of this 0.4% is worker's wages, 1.6% is other productions costs, 8% is materials, and 2% is factory profit. Of the remaining 88%, 11% is product development (probably done in the expensive country) and everything else is advertising, Euro taxes or profit for someone in Europe.
So only 12% of the shoe cost is production cost, and quadrupling it would only add 36 Euros to the shoes, if all other profits were kept the same. And this assumes that that 8% in raw materials would cost 32% in Europe/U.S.; an assumption that is almost certainly untrue, it could be imported as a raw material for about the same cost as it can be obtained in China (sure there is shipping, but that is already included in the price of the shoes). More realistically quadrupling production costs (labor, factory space, factory profit etc.) would add just 12 Euros to the cost.
I think we import more food than export.... (Score:3, Informative)
Actually, I'm not sure of current numbers but I found a report from 2004 that says that we import more food here in the USA then we export. And since a lot of corn is now going to ethanol production, I'm assuming we export even less now.
http://www.organicconsumers.org/corp/exports111204.cfm [organicconsumers.org]
Just because we have a lot of farmland doesn't mean we are making any money from that farmland. Think about that $2 jug of apple juice you just bought at walmart -- you think the apples that made that juice were grown here??? Those apples were grown in China. I am not kidding.
Re:not sure of "out of the woods" vs. something el (Score:1, Informative)
"Gadgets are not something like food; their novelty/luxury items. If (when) the cost goes up across the board, people will spend less of their hard-earned money on the things they don't need - ie, gadgets. "
Luxury items are less prone to inflation.
Re:Honestly, I hope the US (Score:4, Informative)
Are you willing to pay at an increase in price upwards of 300%?
Check out the amateur metalworking hobby/market. I'm talking about a current live market of sort of comparable products.
Sherline manufactures some great lathes and mills in California. Generally the Sherline stuff has a beautiful finish, works right out of the box exactly as specified, its "aerospace grade", like metalworking jewelry. I've never heard of breaking or wearing out under normal use. Nice stuff! Looks nice, works nice, lasts forever.
Similar Chinese lathes and mills are basically considered a parts kit, precision moving surfaces and ball bearings come with genuine Chinese sand at no extra cost, nothing works out of the box without some level of remanufacture, the products are generally larger, the paint job is applied with a spatula. Everyone has either broken, burned out, or worn out junky Chinese machine tools / parts / electric motors, or they know someone whom has done so. Its assumed you'll have to do a full teardown, cleaning, and reassembly after purchase and before use.
The standard slashdot car analogy is its very much like comparing a 1970's American car with a 1990's Japanese car, except in this case the american mill is the japanese car, which now completely confuses things.
The market seems to have stabilized, with comparable big ticket Chinese stuff being about 30% lower cost. None of this 300% increase daydreaming. Ultra small ticket stuff, at the other extreme, like the worlds cheapest chinese endmill manufactured out of zinc if not chrome plated plastic with about a 1 minute usable lifetime cost about 50% less than genuine american made endmills that'll run for days on end.
I have owned a Chinese 7x12 lathe and a CNC converted Sherline mill for a couple years. You never really stop buying accessories, so I keep close track of the market.
In conclusion, in a real live market, not daydreaming, the USA stuff runs about a third to about twice the cost, but you simply cannot buy similar quality product from China.
I have no idea why in one industry the Chinese cannot manufacture a decent machine tool but they can manufacture all the worlds SMD electronics.
Re:I think we import more food than export.... (Score:3, Informative)
Re:Shoddy gadgets from another cheapish country? (Score:3, Informative)
Nonsense. I'm tired of people trolling about Chicago who don't know a goddamn thing about it. Al Capone has been dead for a while now. Chicago is run more honestly (and WAY more efficiently) than many big US cities.
79 local elected officials have been convicted of a crime, including three governors (soon to be 4), one mayor, and 27 aldermen in the last 30 years. Between 1995 and 2004, 469 politicians from the federal district of Northern Illinois were found guilty of corruption. The only districts with higher tallies were central California (which includes L.A.), and southern Florida (which includes Miami). ref sun-times.
Re:The next chinese will be robots (Score:2, Informative)
It's been said, a pair of $75 nike's would cost $300 if made by americans.
New Balance shoes are made in the US and UK, and cost the same as a Nike. Guess where the difference in manufacturing costs are going.
Re:not sure of "out of the woods" vs. something el (Score:2, Informative)
Specifically because their elasticity of demand is high.